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Case Study: Samsung Galaxy Note 7 Product Recall

Case Study: Samsung Galaxy Note 7 Product Recall

In the fall of 2016, Samsung found itself with a problem: the Samsung Galaxy Note 7. Just a few weeks after their latest product was released, consumers were reporting charging problems with the battery. These weren’t just any problems, either. The batteries were catching fire and exploding.  They issued a voluntary recall to anyone concerned about the battery. Samsung thought they had solved the problem by changing battery manufacturers, but the problems persisted.  Soon they issued a formal recall of all Note 7 devices, even going so far as to issue a software update that would render these devices inoperable (though some wireless carriers refused to push the update). Product Recall Coverage Products liability insurance would cover bodily injury and property damage to consumers that were injured by the exploding batteries. This would include damage to clothing, furnishings, or vehicles. Medical expenses related to burns experienced by consumers would also be covered. However, the costs to recall products that may cause damage or injury is usually not covered under a standard products liability policy. That’s where product recall insurance would come in. Product recalls are happening every single day, and they can have a massive impact on the cost of doing business. In December 2016 the Food & Drug Administration (FDA) reported 51 separate product withdrawals or recalls, nearly 2 per day. In the first 8 days of February 2017, the Consumer Product Safety Commission reported 5 product recalls. Costs of Product Recall The Samsung recall affected not only the Note 7 in its first iteration, but also the faulty phones that were issued to replace the original faulty...